Social Enterprises
Category:Bootcamp [[Notes from the Nonprofit Boot Camp 2007|Back to Notes]] *Sheila Warren - Coblentz, Patch, Duffy & Bass LLP (Moderator) *Caroline Pappajohn - New Door Ventures *Kirsten Gagnaire, Social Enterprise Group *social enterprise - An organization or venture that advances its social mission through entrepreneurial, earned income strategies. **spans all corporate forms **organization or venture **sometime nonprofit has social enterprise component, or entire model **social enterprise is changing the world *biggest challenges for social enterprise **same as what face enterprise **capital market issues **effective technical assistance **sba, score don’t quite meet needs **nonprofit orgs also don’t quite needs **cultural issues – when starting within existing org **board issues – wearing nonprofit hat, different when managing social enterprise; needs board education **when starting something new, you may do due diligence but things you didn’t expect pop up *be crystal clear on what you want to do **if objective is to train single mothers, needs flex hours, proper day care **cant be bakery, cant expect them to be there at 5am **most small business have only small chance to succeed in first five years **when do plan, expect 5 years before you break even **be really thoughtful about objectives and outcomes **when's the right time to invest? to close? **finding the right manager – businessperson? nonprofit background? two people? **having the right manager is key *boards **mix of nonprofit & for profit members **have committees – enterprise, evaluation, youth development **look at the enterprise and find what the skills sets are that you need **find people who have been entrepreneurs themselves **social mission understanding **different people to round out your board **find people who understand to blend profit & nonprofit **some board members of nonprofit adamantly opposed to social enterprise *how do you ensure everything in the enterprise leads to the mission **now part of culture and dna – 6 months of planning with several board approvals along the way **many checks that mission of business maps to mission of organization *structures that work **what are your goals **why are you engaging in social enterprise **develop skills assets, get unrestricted income for organization, branding opportunity, **be incredibly clear on goals and reasons **keep it simple **different ways: for profit llc wholly owned by nonprofit; division of nonprofit; **blanket advice: as you're planning you social enterprise, don't get caught up on the structure. goals, business model, then talk to attorney and accountant re corporate form that best fits that ** mission, goal, orientation, purposes **seek local counsel **a lot of these are investigated and audited on a regular basis **what's more important is the mission, e.g. if job training, makes sense to have all under one org **demand same level of accountability **financial bottomline, social mission, go before board every month **a lot of transparency **run it like a business even though its part of a nonprofit *viability ** look at just the business part and see if just the business is at least a break even business, then figure out how much extra does it cost to do the mission (e.g. job training) **factor that cost of goods sold will be higher since it's on the job training **women will need case management support **are we really subsidizing a for profit business? **is it sustainable, not just profitable *two major sources of funding: foundations and individual donors **know the funder you're pitching to, know what they're angle is **skoll foundation – funding scale **some others want smaller **find the right funders, eg early stage; fewer that do due diligence; if they want scale, that's what you have to pitch them – the resources, intellectual capital **Draper Richards Foundation **look for entrepreneurs for funding, much better likelihood of getting support; it's an entrepreneurial model **foundations not interested in long term funding, they do three years **have overview of business model that' realistic, with a reasonable degree of reality **seattle – paul allen foundation **medina foundation **write down everything you care about that’s important, and what's important for them **you need an advocate inside **day one mission alignment **then bring in legal help *models **hybrid corporate form – not there yet **try to make the structures we have work **"getting to scale" by jill bamburg - analyzes businesses with explicitly social missions, case studies on how they got to scale; the only real text and resource – easy read, fascinating *branding vs cause related marketing **you cannot rent a c3 – so many problems giving your name – illegal – you can't give away your name **laundering money through the c3 **when it goes sour, big problem, not thought through properly *Resources **checklist – fundamental questions when you're starting a new; what's the level of risk taking - sustayne.blogspot.com **social enterprise alliance *audits **started as compensation audits, then general audits **people don’t think about it, don’t think it's ubi, their income spikes, they get audited **how much ubit can you generate – no too much – call your accountant **that's why charities spin off their income making – to get ubit out **what's ubit? (unrelated business income tax) limits charitable organizations *how find lawyer? social enterprise-alliance.org **look for one with specific social enterprise knowledge – what clients have you had, what kinds of issues, what common issues you see in your practice **foundations will also refer you **there aren’t that many – centered ion seattle and sf bay, one in ny **needs experience with charities; many business lawyers don’t get charity – most law firms don’t have charity dept – find one with a charitable law department *outlook for growth in social enterprise vs c3 **huge – exploding here, lagging behind rest of the world **not a fad, here to stay, hugely growing sector in the world **looking at the way we do business and meet social issues Notes by: Vanae Tran, Rock Your Awareness; Leo Romero